An Update for Trump Democrats

Donald Trump has been in office for 3-1/2 weeks now and it’s a good time to step back and look at the big picture. Specifically, what do the President’s actions and cabinet appointees tell us about what will likely change for people in the United States, especially those changes that affect his voters who traditionally vote Democratic?

Who are Trump Democrats? They are the older, whiter, more rural and less educated citizens in the country. They are more likely to be blue collar than white collar workers and many belong to a union, or did at one time in their working past. They are also more likely to be men; fifty-three percent of men voted for Trump versus Clinton’s forty-one percent of the male vote. It is also probably safe to say that Trump’s older, male blue collar voter has more health issues than Clinton’s younger, female white collar voter, and Trump’s voter is more likely to smoke and suffer from addiction issues.

So, what will come out of President Trump’s administration for the Trump Democrat?

Healthcare

  1. The Republican are very unlikely to keep their promises:
    1. Forcing insurers to cover preexisting conditions and to allow children to stay on their parents’ insurance policies through age 26 is very costly to the insurers, especially if the subsidy program to help people afford coverage is eliminated.
    2. Switching from subsidies which reduce a person’s monthly premiums to a tax credit a year later means that people who can barely afford to pay for insurance now have to find a whole lot more money each month to afford insurance coverage during the year. Many will go without.
    3. Even without insurance, everyone can get healthcare through emergency room visits which are hugely expensive and will eventually bankrupt both the patients and hospitals if too many people are without insurance coverage.
    4. Under the Republican proposals, you would end up with a system in which only the wealthiest 40% and those who must have insurance for a preexisting condition buy insurance in the individual market. Healthy people will take their chances.
  2. Many health insurers will pull out of most markets because the plans lose money.
    1. The individual market will likely collapse in rural areas because there is no incentive for the only hospital or the only radiology group to cut their fees and make deals with insurers when they have no fear of competition within fifty to three hundred miles.
    2. The same may be true for mid-size cities because of hospital consolidation. It is common for the financially stronger hospital in an area to buy the smaller, weaker ones, and once again, there is less incentive to negotiate with insurers.
  3. One Republican proposal which seems likely involves switching Medicaid to a block grant system. The federal government sends money to the states and they figure out what to do with it. In such a scenario, it’s likely that some, and possibly many people currently covered by Medicaid will lose benefits. They same block grant program could happen with Medicare and other programs in this ‘states rights’ leaning federal government.
  4. Over one-third of Americans have at least one preexisting medical condition.
  5. Whatever changes occur, they are more likely to benefit wealthier Americans and harm poorer ones. For example, the Affordable Care Act levied a 0.9% additional Medicare tax on income over $250,000 per year and Republicans have promised to get rid of that tax.
  6. Attorney General Jeff Sessions has taken a clear stance against medical marijuana and it’s possible the federal government will crack down on its use.
  7. When the dust settles, it’s possible that we will have a slightly tweaked Affordable Care Act (“Obamacare”) or a big change to a single-payer system (“socialized medicine”) supplemented by pay-as-you-go options for those of means.

Wall Street and Main Street

  1. The 2007-2009 Great Recession was caused by banks gambling with money they did not have because the potential profits were so high. We regular Americans share some of the blame because we did not use our ‘free money’ from the banks very well during the housing bubble and when the bubble burst, we discovered the money wasn’t free after all.
  2. Banks and major companies were bailed out under the Bush and Obama administrations because both believed that a collapse of the banking sector would lead to a second Great Depression.
  3. Regulations (Dodd-Frank) were passed to ensure that the big banks would keep more money in reserve so they would be better able to survive another shock to the system and no bank would be considered too big to fail.
  4. The President has promised to roll back the post-recession banking regulations and has stacked his cabinet with Wall Street insiders, some of whom reaped huge profits from the foreclosure crisis.

Education

  1. Betsy DeVos has no experience in public education as a student, teacher, administrator or parent of a student, but has been a huge proponent of school choice and voucher programs, and has campaigned against holding charter schools accountable based on poor results.
  2. While the majority of public education decisions are made on the state and local level, the Department of Education can set standards which help guide those state and local education decisions.
  3. DeVos may be able to direct federal funds in such a way that states which embrace voucher programs are rewarded with additional money.
  4. Voucher programs take money away from public schools and give it to religious and private schools as long as the students’ parents arrange transportation to and from classes. This will benefit children from wealthier families who have the means to make such arrangements, and disadvantage poorer families and their students who do not.
  5. The push toward states rights may mean that the Department of Education will no longer set minimum standards and each state will be allowed to decide their own criteria for graduation. Manufacturers are concerned the high skilled workforce is too small with our current education system and it seems unlikely that will improve with fifty different sets of graduation standards.

Environment

  1. Both President Trump and his head of the Environment Protection Agency (EPA) Scott Pruitt have railed against the EPA and the environmental regulations they believe harm business. Scott Pruitt has sued the EPA and a rollback is expected under his watch. Trump has also signed an executive order that two regulations must be eliminated for each new regulation proposed.
  2. The EPA came into existance during the Nixon Administration following a highly newsworthy event – the Cuyahoga River in Northeast Ohio was so polluted that it caught fire in 1969. Environmental regulations have been instrumental in cleaning up the nation’s waters, air and soil, but at the same time, many manufacturers moved out of the country. One of the factors that a company will consider before making such a move is the cost of environmental regulations in the U.S. versus a different country. Clean manufacturing is more expensive than dumping the byproducts and waste on the ground next to the factory.
  3. The Obama administration’s Clean Power Plan made it costly to burn coal for electricity generation and many utilities have invested in renewable energy or converted power plants to natural gas. President Trump has promised to revive the coal mining industry by turning back that initiative, but there is a real health and financial benefit to reducing air pollution by moving away from coal. Struggling coal miners are easy to highlight while charts on asthma occurrences are not, but dirtier air does shorten and reduce the quality of life.
  4. It’s not likely that a Trump/Pruitt EPA will ever allow a river to become so polluted again that it will catch fire, but have no doubt that we are all experiencing the effects of manmade climate change. There is a lot more energy in the atmosphere than was the case a decade or two ago because of the current level of warming. That leads to more powerful storms and wider swings in temperatures. When do you remember tornados in December and January, or large snowstorms the day after shorts weather in the Northeast? The flooding in Louisiana last year and in North Carolina before that are the result of powerful storms kept in place by other powerful weather systems. It may have been an isolated incident a couple decades ago, but now it’s much more frequent.
  5. President Trump says he wants to invest heavily in infrastructure and he better hurry. The thing that damages roads and bridges the most are freeze-thaw cycles, and we have been experiencing many more of those as the planet warms.

Taxes & Deficits

  1. The President’s proposed individual income tax cut would give an average tax break of about $122,400 to the top 1% and those who make $1 million and more would average a $317,000 tax cut. A middle-class family would see about a $500 reduction in federal income taxes while single-parent households would pay higher taxes due to the elimination of the Head of Household filing option.
    1. Many tax experts believe the deficit will balloon under such a plan, but supporters say increased growth will generate enough income to offset the lost tax revenue from the reduced rates. One way to look at this is to compare budget deficits as a percent of gross domestic product after removing Social Security and the Postal Service (called “On Budget”).
      1. Big tax cuts: beginning of the Reagan and G.W. Bush terms.
      2. Big tax increases: beginning of Clinton’s term and halfway through Obama’s term, but only on the wealthy for the latter.
      3. On Budget Deficit as % of GDP:
        1. 87% higher during Reagan’s term vs. Carter’s term.
        2. 64% lower during Clinton’s term than G.H.W. Bush’s term.
        3. 94% higher during G.W. Bush’s term vs. Clinton’s term.
        4. 47% lower during 2nd half of Obama term vs. 1st half (Great Recession makes this hard to evaluate – it occurred during a time with low taxes). Last 4 years under Obama matched G.W. Bush’s 8 years.
    1. How about federal revenue and spending growth?
      1. Carter (4 years): Revenue +74%, Spending +59%,
      2. Reagan (8 years): Revenue +76%, Spending +80%,
      3. G.H.W. Bush’s (4 years): Revenue +20%, Spending +30%,
      4. Clinton (8 years): Revenue +86%, Spending +30%,
      5. G.W. Bush’s (8 years): Revenue +25%, Spending +67%,
      6. Obama (8 years): Revenue +29.4%, Spending +29.2%, and
      7. Obama’s last 4 years: Revenue +33%, Spending +9%.
  1. At least since the Carter presidency:
    1. The deficit grew worse following tax cuts and improved following tax increases.
    2. Every Democratic president oversaw a period when federal revenue grew faster than federal spending.
    3. Every Republican president saw the opposite – federal spending growth outpaced federal revenue growth.
  2. Conclusion
    1. Based on the historic data, the deficit as a percent of GDP is likely to increase as a result of President Trump’s individual income tax cut plan.

About tonyj126

I'm a 50+ married man who always seems to have a large backlog of work to do, but also a lot of flexibility in my schedule. Much of the work I do is volunteer or taking care of extended family members. I suffer from, as my priest calls it, "the sin of self-sufficiency," which means I can figure out how to do most things myself, and consequently, reduce the need for community to solve problems. As a logical extention (at least to me), I find myself called to comtemplate the country's and the world's woes and offer my observations. I hope someone out there will find them useful.
This entry was posted in Economics, Education, Healthcare, Trump Democrats Update, U.S. Politics, Uncategorized. Bookmark the permalink.

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